Oil slips on API report of US inventory rise

Muriel Colon
February 8, 2019

The impact of OPEC+'s supply curbs has been boosted by USA sanctions on Venezuelan state-owned oil firm PDVSA.

Higher American output is threatening to offset cuts by the Organization of Petroleum Exporting Countries and its allies.

A day after the American Petroleum Institute disappointed oil bulls by reporting an estimated inventory build across the board, the Energy Information Administration deepened the mood by saying USA crude oil inventories added 1.3 million barrels in the week to February 1.

Brent crude oil futures were last down $0.12 at $62.57 a barrel by 1022 GMT, while United States crude futures were down $0.07 at $53.94 a barrel.

"The collapse in oil prices late previous year has resulted in more cautious spending by United States oil explorers", said Dhar.

Brent crude futures dropped 24 cents, or 0.38 percent, to settle at $62.51 a barrel.

U.S. commercial crude oil inventories increased by 1.3 million barrels in the week ending February 1, said the U.S. Energy Information Administration on Wednesday.

Average weekly crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018.

U.S. sanctions on Venezuela's state oil company could also lift prices, though they have yet to trigger any sharp increase. The surge comes shortly after Washington slapped sanctions on the Venezuelan state oil company PDVSA.

Venezuela, like other OPEC members Iran and Libya, was exempted from making voluntary curbs under the deal on expectations that its output faced involuntary downward pressure in 2019. USA crude output stayed at a record-high 11.9 million barrels a day.

The report revealed that there have been encouraging signs in trade talks between the USA and China over tariffs recently, and any agreement between the two countries could provide upside to oil demand, and indeed oil prices, going forward. -China meetings next week ahead of a March 1 deadline for trade tariffs to rise. Oil prices fell on Tuesday after a survey showed euro zone business expansion almost stalled in January.

Russia has been in full compliance with its pledge to gradually cut its oil production, Russian Energy Minister Alexander Novak said in a statement on Monday, adding that production fell by 47,000 barrels per day (bpd) in January from October.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a delegation to Beijing next week to lay the groundwork for a meeting between Presidents Donald Trump and Xi Jinping later this month.

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